Here at Delta-EE, we have been talking about auto-switching as an important, emerging trend for a very long time. As long ago as May 2017, my colleague Jenny Carson posed the question, “Is the energy industry underestimating its potential to mix things up?”, noting in passing the added appeal of completely free variants of the concept, based on Delta-EE’s own customer research.
The lingering doubt, as with any innovation, was whether it would all just prove to be a passing fad. By the time we revisited the topic in late 2018, we had, however, identified no fewer than 20 auto-switchers across the globe, which suggested, if nothing else, that a lot of entrepreneurs thought it was just as promising an idea as we did. But the uncertainty remained, with few of the major price comparison sites climbing on board, and some of the first auto-switch companies, such as Voltz (UK) and Wechselfuchs (DE), disappearing almost as quickly as they had first appeared.
But then things started to change, with a few of the larger players deciding to acquire some of the most promising start-ups e.g. Look After My Bills (UK) was acquired by GoCompare parent GoCo PLC (UK) and Flipper (UK) by Wessex Water (UK).
Today, however, may be the most important milestone yet in the evolution of the concept, for, as of this morning, consumer champion MoneySavingExpert.com (UK) has launched its very own auto-switching product to its existing Energy Club members. MoneySavingExpert (MSE) has high brand exposure in the UK, through multiple media outlets (web, mainstream TV, radio, press). If they go on to leverage these channel opportunities, auto-switching will become a much more widely known concept in the country.
This matters as the UK has led the way with auto-switching, with Germany second and everywhere else quite a long way behind.
MoneySavingExpert claims to have >4.5M “members” in its Energy Club price comparison service, though a member is not quite the same thing as a live service user (It appears to refer to anyone who has ever opened an account with them and used their comparison service at some point). Still, this is a leading mainstream comparison site and it is very much positioning auto-switching as its most complete offer, within a three-stage customer journey:
- DIY Comparison – allows the user to search the market and make independent switching decisions
- Pick Me A Tariff – does the same as DIY comparison but also selects the ‘top tariffs’, based on selected user preferences (e.g. price, service, green energy)
- Help Me Pick A Tariff And Autoswitch Me Yearly – Does the same as ‘Pick Me A Tariff’ but also auto-switches the user to the top tariff annually, with single-click approval.
Thus auto-switching is being positioned as the natural next step by MSE: first, we run market comparisons for you, then we highlight the best tariffs, now we switch you to the best one, automatically. All of which suggests that the answer to our previous question about whether auto-switching is a fad or an important new trend, is the latter.
In fact, MSE is not alone in thinking this. GoCo now owns two auto-switch engines – WeFlip and Look After My Bills – though it continues to operate them as separate brands, effectively at arm’s length from its core GoCompare.com service. Interestingly, the company recently explained that it runs the two new initiatives out of one integrated “AutoSave” team, adding that, “We are focused on transforming the huge addressable auto-switching opportunity, generating savings for consumers, and have confidence we will continue to sustainably scale the business through H2 2020".
So, is that it? Will we all now just auto-switch in future?
Not necessarily. Here, at Delta-EE, we can see two potential barriers to progress:
- The whole model may yet sow the seeds of its own demise as, with a few exceptions, most of these engines rely heavily, for their viability, on supplier commission. And, unlike traditional price comparison services, which give suppliers the opportunity to win over new customers, and thus retain their business at the end of their contract on more attractive terms, auto-switchers are explicitly designed to reduce the likelihood of this happening. Thus, the business they bring in may be deemed, by suppliers, not to be worth rewarding to the same degree as that secured via other channels.
- Mainstream customers may yet decide they do not like the idea. Free services have their benefits, but they come with drawbacks too and customer service is often one of them. MoneySavingExpert’s own Trustpilot rating has plummeted to a dismal 2.3 in recent years and it is difficult to read the many reviews of its service without concluding that energy supplier recommendations have played their part. One wonders what may happen if householders become confused as switching frequency increases, leading to more final meter reads and more, often baffling, final bills. Will the auto-switcher then be caught in the crossfire and deemed, by the customer, to be the source of their problems?
We continue to follow the continuing auto-switch saga at Delta-EE, as part of our wider remit to monitor the new energy transition. To stay in touch with the narrative around this and other emerging new energy business models, why not take a look at Delta-EE’s New Energy Business Model Service webpage?